United States Securities and Exchange Commission
Washington, D.C. 20549
NOTICE OF EXEMPT SOLICITATION
Pursuant to Rule 14a-103
Name of the Registrant:
International Business Machines Corporation
Name of persons relying on
exemption: Clean Yield Asset Management
Address of persons relying on
exemption: 16 Beaver Meadow Road Norwich, VT 05055
Written materials are submitted pursuant to Rule 14a-6(g)(1)
promulgated under the Securities Exchange Act of 1934. Submission
is not required of this filer under the terms of the Rule, but is
made voluntarily in the interest of public disclosure and
consideration of these important issues.
PROXY MEMORANDUM
| TO: |
International Business
Machines Corporation Shareholders |
| RE: |
Item
No. 8 (“Stockholder Proposal Requesting a Public Report on
Harassment and Discrimination Prevention Efforts”) |
| DATE: |
March
17, 2023 |
| CONTACT: |
Molly
Betournay, molly@cleanyield.com |
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card; Clean Yield Asset Management
is not able to vote your proxies, nor does this communication
contemplate such an event. Clean Yield Asset Management urges
shareholders to vote for Item No. 8 following the instructions
provided on management's proxy mailing.
Clean Yield Asset Management urges shareholders to vote YES on
Item No. 8 on the International Business Machines Corporation (IBM)
2023 proxy ballot. The resolved clause states as follows:
Resolved:
Shareholders request the Board of Directors commission an
independent review of the effectiveness and outcomes of the
Company's efforts to prevent harassment and discrimination against
its protected classes of employees and issue a public report
summarizing the findings.
Supporting Statement:
In its discretion, the Board may wish to consider including in the
report disclosures such as these:
|
● |
the total number and aggregate costs associated with disputes
settled by the Company related to harassment or discrimination in
the previous three years; |
|
● |
the total number of pending harassment or discrimination
complaints the Company is seeking to resolve through internal
processes, arbitration, or litigation; |
|
● |
the total number and aggregate costs associated with contracts
that include exit or other agreements where concealment clauses
that restrict discussions of harassment or discrimination are
present; and |
|
● |
an estimate of the number of claims which may be made public,
should existing nondisclosure or arbitration agreements be made
null by changing legislation. |
The report should not include the names or details of settlements
without consent and should be prepared at a reasonable cost and
omit any information that is proprietary, privileged, or violative
of contractual obligations.
About Clean Yield Asset Management
Clean Yield Asset Management (“Clean Yield”) is an investment firm
based in Norwich, VT, specializing in socially responsible asset
management. We have filed this shareholder proposal on behalf of
our client, the Jay Stanley Weisfeld Trust, a long-term shareholder
in IBM, because we are concerned that IBM’s use of concealment
clauses may mask patterns of employment discrimination and, in
doing so, put shareholder value at risk.
Background to the Proposal
At IBM’s April 2022 Annual Meeting of Stockholders, 64.7% of IBM
investors supported a shareholder resolution filed by Clean Yield
Asset Management asking that IBM’s Board of Directors prepare a
public report assessing the potential risks to the company
associated with its use of concealment clauses in the context of
harassment, discrimination, and other unlawful acts.
This resolution was made necessary by the company’s ongoing use of
concealment clauses, particularly non-disclosure and arbitration
requirements at severance. In February 2023, IBM released a
document entitled “Report on Concealment Clauses.” In the
assessment of the proponent, the report addresses neither the core
concerns of the 2022 proposal nor the requests made in this 2023
proposal that IBM conduct an independent review of the
effectiveness and outcomes of the Company's efforts to prevent
harassment and discrimination against its protected classes of
employees.
Rationale in Support of This Proposal
|
1) |
Current reporting does not address investor concerns. |
|
2) |
Public data is at odds with IBM’s claims. |
|
3) |
The company’s practices remain unclear. |
|
4) |
IBM’s apparent use of concealment clauses remains a significant
concern. |
|
5) |
Investors benefit from accountability systems within
companies. |
Current Reporting Does Not Address Investor Concerns
The use of concealment clauses in employment and post-employment
contracts is concerning, as these clauses obfuscate from external
parties, such as investors, the extent to which harassment and
discrimination are occurring in the company’s workplaces. Given
that these practices remain in place at IBM, the intention of this
2023 resolution, in its request that an independent review be
conducted of IBM’s efforts to prevent harassment and
discrimination, is to provide assurance to investors that IBM’s
internal practices are effective. Unfortunately, confidence in
IBM’s harassment and discrimination prevention programs has been
harmed by a number of significant allegations of discrimination at
the company.
1) Company report fails to address core workplace
concerns.
The proponents believe that the “Report on Concealment Clauses”
published by IBM in February 2023 and referenced in the statement
of opposition to this proposal as having fulfilled the request of
the proposal does not provide substantive additional information or
insights to address the core concerns raised in the 2022 proposal.
Much of this information had already been shared with investors
through the company’s statement of opposition to a 2022
resolution1 that requested that “the Board of Directors
prepare a public report assessing the potential risks to the
company associated with its use of concealment clauses in the
context of harassment, discrimination and other unlawful acts.”
64.7% of shareholders supported the 2022 resolution. However, IBM’s
“Report on Concealment Clauses” does not appear to be responsive to
the requests made by investors in the 2022 resolution, nor to the
request of the current resolution seeking independent assessment of
the effectiveness of IBM’s workplace equity programs. Instead, the
report that the Company published appears to be an elongated
version of IBM’s statement in opposition to the 2022 proposal,
which had also detailed the company’s policies and procedures, that
concealment clauses are applied only post-employment and
that the Board has oversight of IBM’s culture and work environment.
The reporting requested by this resolution, which would provide
data to indicate the effectiveness and outcomes of the company's
efforts to prevent harassment and discrimination against its
protected classes of employees, is not included in this report.
2) No independent review has been conducted.
This resolution requests “an independent review of the
effectiveness and outcomes of the Company's efforts to prevent
harassment and discrimination against its protected classes of
employees and issue a public report summarizing the findings.” No
independent review appears to have been conducted. An independent
review is important, as concealment clauses may benefit and protect
management, to the detriment of investors and other
stakeholders.
3) No quantitative data has been provided.
IBM, in its statement against this proposal, states that it has
addressed the concerns raised in the proposal through the
publication of its “Report on Concealment Clauses.” It does not do
so. Specifically, the resolution suggests that IBM provide the
following:
|
● |
the total number and aggregate costs associated with disputes
settled by the Company related to harassment or discrimination in
the previous three years; |
|
● |
the total number of pending harassment or discrimination
complaints the Company is seeking to resolve through internal
processes, arbitration, or litigation; |
|
● |
the total number and aggregate costs associated with contracts
that include exit or other agreements where concealment clauses
that restrict discussions of harassment or discrimination are
present; and |
|
● |
an estimate of the number of claims which may be made public,
should existing nondisclosure or arbitration agreements be made
null by changing legislation. |
While the report states that IBM uses confidentiality in
post-employment agreements in limited circumstances, the company
provides no additional information about the “limited”
circumstances in which these clauses are used.
_____________________________
1
https://www.sec.gov/Archives/edgar/data/51143/000110465922031075/tm2122634-2_def14a.htm
2 https://www.nytimes.com/2022/02/12/business/economy/ibm-age-discrimination.html
3
https://www.reuters.com/legal/litigation/judge-upholds-ibm-workers-arbitration-pacts-age-bias-litigation-2022-07-14/
4 https://www.bloomberg.com/news/articles/2021-11-18/ibm-arbitration-gag-rules-are-illegal-fired-workers-say
5 https://www.nytimes.com/2022/02/12/business/economy/ibm-age-discrimination.html
6
https://www.dol.gov/sites/dolgov/files/OFCCP/foia/files/2021093-IBM-R00207936-MA-CA-Redacted.pdf
7
https://www.hrdive.com/news/jury-awards-11m-to-ibm-manager-fired-after-reporting-discrimination/598983/
8
https://wraltechwire.com/2020/06/17/report-ibm-settles-lawsuit-with-black-software-salesman-over-2-4m-in-commissions/
9
https://www.law360.com/articles/1235969/ibm-inks-80k-deal-to-settle-ex-worker-s-pregnancy-bias-suit
Public Data Is at Odds With IBM’s Claims
1) Media reports indicate that IBM’s arbitration use is not
limited to rare cases.
IBM states that it utilizes confidentiality in post-employment
agreements only in limited circumstances. However, it appears that
their use may encompass a large number of former employees.
According to The New York Times, in 2014 the company began
instituting mandatory arbitration on discrimination claims in order
to receive severance packages.2 In July 2022, 26 former
IBM employees sought release from their requirement that they
arbitrate employment-related disputes,3 and it appears
that hundreds of ex-employees have also been bound by
arbitration.4
If the company also utilizes nondisclosure agreements, neither the
media nor IBM’s investors would be able to know this; that the
agreements themselves are secret is often a definitional component
of these types of agreements.
2) IBM has faced a number of allegations of workplace
discrimination.
IBM writes in its statement in opposition to this proposal, “IBM
does not tolerate discrimination or harassment and has clear
policies, procedures and practices relating to the prevention of
harassment or bullying in the workplace.” Its “Report on
Concealment Clauses” also speaks to a “decades-long culture that
does not tolerate discrimination or harassment, and has clear
policies, procedures and practices in place to protect and support
IBMers.” However, the following serious allegations of
discrimination have been reported in the media:
|
● |
IBM has been accused of engaging in a pattern of discrimination
against older workers in which they were targeted in layoffs. This
alleged discrimination included calling older employees
“dinobabies” and referring to older female employees as a “dated
maternal workforce.” 5 |
|
● |
In September 2021, the Department of Labor’s Office of Federal
Contract Compliance Programs (OFCCP) found that IBM US Public
Service GBS engaged in pay discrimination against 115 female
project managers.6 |
|
● |
In April 2021, a jury awarded $11.1 million to a manager to who
was wrongfully fired after raising claims of racial discrimination
in compensation.7 This settlement followed a June 2020
report that IBM allegedly paid $2.4 million over allegations of
race discrimination in sales commissions.8 |
|
● |
In May 2020, IBM agreed to pay $80,000 to settle pregnancy
discrimination claims.9 |
This lack of consistency, or explanation, between IBM’s statements
and what is available to investors through other sources is a key
reason why an independent review of the effectiveness of IBM’s
efforts to prevent harassment and discrimination is requested.
The Company’s Practices Remain Unclear
The company claims that it does not use concealment clauses, while
also stating that it uses confidentiality provisions in
post-employment agreements. This has created confusion for
investors.
As defined in the shareholder resolutions, concealment clauses are
“employment or post-employment agreements, such as arbitration or
nondisclosure agreements, that IBM asks employees or contractors to
sign which would limit their ability to discuss unlawful acts in
the workplace, including harassment and discrimination.” In the IBM
Board’s statement of opposition and in IBM’s “Report on Concealment
Clauses,”10 it writes that “IBM does not require
concealment clauses” [as a condition of employment]. However, it
also states in these same documents that “IBM uses confidentiality
provisions in post-employment agreements in limited
circumstances only where mutually agreed by the parties and legally
permitted.” [emphasis added]
The assumption is that while former employees may voluntarily sign
post-employment agreements with arbitration and NDA provisions at
the point of severance, at this point in time, they may be
concerned about their finances. Therefore, while the signing of a
severance agreement may not be required, an individual may be
facing significant financial incentives to sign this document. The
extent of this financial incentive, should it exist, has not been
shared by IBM. The release of the aggregated costs of these types
of agreements is suggested for inclusion in the requested
report.
IBM’s Apparent Use of Concealment Clauses Remain a Significant
Concern
A number of risks are associated with the use of concealment
clauses.
1) Risk of a possible surge in claims
IBM’s ongoing use of concealment clauses creates the risk of a
sudden surge of claims against the company should the laws change
or other legal pathways emerge to invalidate post-employment
concealment clauses. When previously hidden discrimination or
harassment problems surface, multiple employees may step forward at
once, creating a sudden and significant brand liability.
Allegations of harassment or discrimination, once released, may
significantly disrupt business operations and undermine long-term
business strategies, as occurred at Activision, 21st Century Fox,
Alphabet, CBS, Intel, Nike, Pinterest, Texas Instruments, Walt
Disney, Wynn Resorts, and many others.
2) Risk of harm to relationship with employees
In addition to the IBM employees who have already sought relief
from arbitration clauses, this issue can easily escalate at a
company where it is masking significant harassment or
discrimination issues. For instance, employees have protested the
use of arbitration or other concealment clauses at other technology
companies, including Activision, Airbnb, eBay, Meta, Pinterest, and
Riot Games.11 For years, Activision Blizzard reportedly
withheld information from its board of directors about sexual
misconduct complaints, leading, once the problems surfaced, to
significant negative press attention; several government lawsuits
alleging Activision Blizzard permitted a culture of sexual
harassment, abuse, and discrimination; and multiple employee
walkouts. Since the controversy erupted, the company ended its use
of forced arbitration in sexual harassment and discrimination
claims.12
_____________________________
10 https://www.ibm.com/impact/pdf/Concealment%20Clause%20Report.pdf
11 https://www.theguardian.com/media/2021/oct/20/netflix-employees-activism-walkout-dave-chappelle-controversy
12 https://www.theverge.com/2021/10/28/22750450/activision-blizzard-ends-forced-arbitration-bobby-kotick-paycut
3) Risk of harm to brand perception
The use of concealment clauses for discrimination and harassment
claims has generated significant controversy, as the #MeToo and
racial justice movements call attention to how provisions limiting
workers’ (or former workers’) ability to speak freely about their
experiences can perpetuate abuse and protect predators. Organized
groups of tech workers, members of Congress, and political
candidates have all expressed opposition to mandatory arbitration
and nondisclosure agreements; press coverage has been abundant.
4) Risk of litigation
In 2020, in violation of their signed nondisclosure agreements, a
number of workers spoke to the press about experiences of racism
and discriminatory pay at Pinterest.13 Shareholders
ultimately sued Pinterest executives, alleging a breach of
fiduciary duty by “perpetrating or knowingly ignoring the
long-standing and systemic culture of discrimination and
retaliation.”14 As part of its shareholder settlement
agreement, Pinterest pledged $50 million to overhaul its workplace
culture and promote diversity, and it agreed to release former
employees from nondisclosure agreements.15
5) Risk that the use of concealment clauses undermines diversity
and inclusion programs
In February 2018, attorneys general from all 50 states signed a
letter calling for the end of mandatory arbitration in sexual
harassment cases. They stated, “[C]oncerns arise from the secrecy
requirements of arbitration clauses, which disserve the public
interest by keeping both the harassment complaints and any
settlements confidential. … Ending mandatory arbitration of sexual
harassment claims would help to put a stop to the culture of
silence that protects perpetrators at the cost of their
victims.”16
Significant concerns about arbitration’s appropriateness as a forum
for handling discrimination cases have been raised by the EEOC, the
U.S. Government Accountability Office, and FINRA. For instance, in
2016, the legal counsel at the EEOC observed that “The EEOC’s
stance has always been that mandatory arbitration of employment
discrimination is bad: the secrecy, the lack of
precedent.”17
The benefits of diverse and inclusive workplaces have been well
documented. Research on this topic includes, but is not limited to
the following:
|
● |
Credit Suisse, in a study of over 3,000 companies, found that
companies with women representing more than 20% of managers have
had greater share price increases over the past decade than those
companies with lower representations of women in
management.18 |
|
● |
McKinsey has found that companies in the top quartile for
gender diversity in corporate leadership were 21% more likely to
have above-average profitability, compared to those companies in
the bottom quartile. Similarly, leaders in racial and ethnic
diversity were 33% more likely to outperform industry peers on
profitability than companies in the bottom
quartile.19 |
|
● |
A 2019 study of the S&P 500 by The Wall Street
Journal found that the 20 most-diverse companies had an average
annual five-year stock return that was 5.8% higher than the 20
least-diverse companies.20 |
_____________________________
13
https://www.washingtonpost.com/technology/2020/07/03/pinterest-race-bias-black-employees/
14 https://www.institutionalinvestor.com/article/b1phvnsfffr2bp/Retirement-System-Sues-Pinterest-Board-and-Execs-Over-Discrimination
15 https://www.nytimes.com/2021/11/24/technology/pinterest-discrimination-settlement.html
16 http://myfloridalegal.com/webfiles.nsf/WF/HFIS-AVWMYN/$file/NAAG+letter+to+Congress+Sexual+Harassment+Mandatory+Arbitration.pdf
17 https://time.com/4540111/arbitration-clauses-sexual-harassment
18 https://www.cnbc.com/2019/10/14/female-leaders-may-boost-share-price-performance-credit-suisse-says.html
19 https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity
20
https://www.wsj.com/articles/the-business-case-for-more-diversity-11572091200
|
● |
Of particular relevance to IBM, a strong link seems to exist
between diversity and innovation revenue. BCG has found that, after
surveying 1,700 companies, companies with above-average diversity
produced significantly greater percentages of revenue from products
or services launched within the previous three years than those
with below-average diversity.21 |
6) Risks associated with a shifting legislative
landscape
IBM is currently operating under a patchwork of state and
international laws. At the federal level, the Ending Forced
Arbitration for Sexual Assault and Sexual Harassment Act and the
Speak Out Act have banned the use of arbitration and pre-dispute
nondisclosure agreements for sexual assault and harassment. Within
the states, California and Washington have prohibited nondisclosure
agreements from including any harassment or discrimination
allegations.
7) Risk that IBM will lose talent to peers
Technology companies, with which IBM may compete for recruitment
and hiring, have moved away from the use of employee arbitration in
claims of harassment or discrimination, or they have never required
its use. Many technology companies, including Alphabet, Apple,
Microsoft, and Salesforce, have moved away from the use of these
policies.
Investors Benefit from Accountability Systems within
Companies.
Intrinsic to investments in public companies is the risk that
company managers’ goals do not align with those of the company’s
investors. Concealment clauses also provide advantages to managers
and executives who wish to limit their own accountability and keep
their actions hidden from external stakeholders; these clauses mask
true workplace conditions from external parties, increasing the
risk of diverging investor and manager goals.
The use of concealment clauses raises concerns that corporate
managers are operating with a sense of impunity, and rather than
relying on the successful implementation of best practices, they
may be relying on the ability of arbitration, nondisclosure
agreements, and nondisparagement agreements to mask failures in
their internal systems. In addition, arbitration, in its ability to
prohibit class-action lawsuits, reduces the incentive for companies
to address smaller, yet potentially widespread, problems within
their human capital management systems.
CONCLUSION
While the company asserts that it uses concealment clauses only in
limited circumstances and that it has a “safe and productive work
environment,” the EEOC’s concerns about age discrimination at IBM,
coupled with related lawsuits on behalf of former employees,
suggest that IBM’s use of concealment clauses may be masking
concerning employment practices from the public eye. With
concealment clauses in place, investors may be barred from
understanding the extent of significant human resources challenges
within the company.
In order to remedy this lack of transparency, a majority of
shareholders in 2022 voted in favor of a report assessing the
potential risks to the company associated with its use of
concealment clauses in the context of harassment, discrimination,
and other unlawful acts. However, IBM has provided inadequate
transparency regarding the effectiveness and outcomes of its
efforts to prevent harassment and discrimination.
_____________________________
21
https://www.forbes.com/sites/forbesinsights/2020/01/15/diversity-confirmed-to-boost-innovation-and-financial-results/
We urge you to vote in favor of Item 8 on the management’s proxy,
to provide investors with the needed information to assess the
Company’s management of human capital risks.
***
For questions regarding Item No. 8, please contact Molly Betournay,
Clean Yield Asset Management, molly@cleanyield.com,
(802)-526-2525.
This is not a solicitation of authority to vote your proxy. Please
DO NOT send us your proxy card; Clean Yield Asset Management is not
able to vote your proxies, nor does this communication contemplate
such an event. Clean Yield Asset Management urges shareholders to
vote for Item No. 8 following the instructions provided on
management's proxy mailing.
Grafico Azioni International Business M... (NYSE:IBM)
Storico
Da Mag 2023 a Giu 2023
Grafico Azioni International Business M... (NYSE:IBM)
Storico
Da Giu 2022 a Giu 2023
